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US elections and environment: The dubious goal of US ‘energy independence’

Energy policy featured only briefly in the first debate between President Obama and his challenger Mitt Romney. As became evident in the second debate, Romney’s case for restoring strong economic growth…

Barack Obama and Mitt Romney share the goal of US “energy independence”. Neil Kremer/Flickr

Energy policy featured only briefly in the first debate between President Obama and his challenger Mitt Romney. As became evident in the second debate, Romney’s case for restoring strong economic growth hinges on his plans to favour investment by the oil sector, especially in non-conventional sources of oil and gas.

Romney made much of Obama’s proposals to reduce subsidies or tax breaks to the enormously profitable US oil sector. Romney has pledged not only to retain these tax breaks but to double their annual value to $US4.5 billion, by reducing the direct corporate profits tax rate from 38% to 25%.

But a jobs policy based on the demands of Big Oil has major defects. Obama was able to claim the jobs benefits from (climate friendly) stimulus he provided to manufacturers of more fuel-efficient vehicles and the wind-power industry. These policies are not part of the oil sector’s agenda and not favoured by Romney, who is locked into the climate change denialism of much of the oil sector as well as the Tea Party zealots.

Energy policy is important. It interacts with more fundamental policies such as national security, environmental protection, and macro-economic policy. These interactions are often about spin and symbolism as much as the clash of material and vested interests.

The questionable goal of US “energy independence”

US “energy independence” is about reducing oil imports into North America to reach zero (net) imports over some period. Such a goal has been professed since at least Nixon’s era in the early 1970s. Like their predecessors, both Obama and Romney profess this goal, but for quite distinct reasons.

Reliance on oil imports can be reduced in two ways. Those concerned about climate change and environmental issues favour demand-side policies and regulations. Some attention is given to “renewable” fuels. These claims can be questionable, as in the case of corn-based fuel ethanol. Proposed “alternative” vehicles such as all-electric cars remain marginal in the immediate future.

Romney, faithful to oil interests, would rather deregulate fuel-saving policies. He proposes enhanced domestic supply through mechanisms additional to tax breaks. He is also committed to removing Federal safety regulations on shale gas, “tight oil”, and to unconditionally approving pipe-lining of Canadian tar sands. He also favours unconditional extension of drilling to Federal lands, including ecologically sensitive areas such as the Arctic National Wild Refuge.

Macro-economic aspects of seeking US oil independence

Historically, sharp upward movements in the international price of oil have disrupted the US and global economies, especially in the 1970s and in the years around 2008. But such price disruptions would not be precluded by the US making itself less dependent on oil imports.

Rather (and despite Romney’s somewhat ridiculous attempts to saddle adverse gasoline price trends with Obama), the price of oil is determined by international markets. The share of global production attributable to the US has a limited direct effect on such markets, and hence on the global economy. Subsidised and under-regulated supplies of domestic oil can’t be regarded as especially reliable and stable. The negative impacts of Hurricane Katrina (2005) and of BP’s Deep Horizon disaster (2010) demonstrated that.

Expanded supplies of US non-conventional oil requiring prices not less than $US60-80 a barrel will hardly put downward pressure on world oil prices. The US remains by far the largest OECD consumer of oil in per capita terms, not unrelated to its very low fuel taxes and pre-2008 preference for gas-guzzlers. A determined effort to encourage long-term fuel saving through demand-side measures in the US and elsewhere, especially in rapidly motorising China and India (with fuel taxes also very low), would indeed put downward pressure on international crude oil prices and reduce the risk of macro-economic crisis.

Unsurprisingly, such prudent demand-side policies are favoured neither by OPEC nor by Big Oil. Hence, their conspicuous absence from Romney’s energy and macro-economic policy agendas.

Mitt Romney has pledged to work with Big Oil in shaping his energy policies. EPA/Rick Wilking

Geo-strategic aspects of the US oil independence myth

US oil independence is also promoted because of its professed political and military connections with the oil-rich Middle East. For US voters wary about excessive and extremely costly military involvement in the region, moving toward oil independence may seem like a panacea. Unfortunately, this is far from the case.

Given US “grand strategic” aspirations to global primacy, its military involvement, globally or in the Middle East, is not closely coupled to any future reduction in oil import dependence.

As long as these US aspirations to continued global primacy persist, ill-judged US intervention in the oil-rich but unstable Middle East continue to threaten world peace. Instead, the US should be retrenching to more defensible positions and it should be seeking to normalise its relationships with Middle East states. These include oil- and gas-rich Iran (for three decades viewed as a permanent adversary) and nuclear-armed Israel (unconditionally supported and exercising a veto power over US policy in the region).

Early in his term of office, Obama appeared to be on a track to rapprochement with Iran but later steered away from this course, in large part for reasons of toxic domestic politics.

Foreign policy parvenu Romney appears disinclined to break with failed past policies in the Middle East. He has surrounded himself with policy advisers urging “preventive” war against Iran. This would be an exceedingly dangerous and unpredictable course. For example, if the straits of Hormuz were to be closed it would represent a shock to world production that in percentage terms would be three times as big as the 1973-74 OPEC embargo.

The spurious goal of oil import “independence” has passed its use-by date.

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9 Comments sorted by

  1. alfred venison

    records manager (public sector)

    the keystone pipeline project, to pump athabaska tar sands crude to refineries in texas, is like holy writ in alberta & was badly "disrespected," to their minds, when obama postponed construction earlier this year.

    whoever wins in november is going to have to pucker up & put lip to cold canadian butt, if they really want that stuff again. and on easy terms. and with the jobs in texas.

    when that postponement was announced, the redneck patriots in alberta went ballistic: "ok, ok, we'll sell…

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  2. Theo Prinse

    logged in via Twitter

    1. "Macro-economic policies" That is code for marxist re-distributive economics.
    2. "Reliance on oil imports can be reduced in two ways. Those concerned about climate change and environmental issues favor demand-side policies and regulations" and "Energy policy is important. It interacts with more fundamental policies such as national security" -like most of prof. Roberto Ungers thesis - contradict. regulate oil consumption .. national security on unlimited reserves of diesel oil for US tanks contradicts…

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  3. Michael Shand

    Software Tester

    Good artcile, thanks for posting, to hear leaders of any developed nation still talking about getting more oil in the frame of "Energy independence" is insane

    Its the complete opposite of what we should be doing but based on the comments above and the general feel from america it seems to be a one track mind - more focus on 19th century technology

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    1. Barry Naughten

      Energy political economist and international relations specialist at Australian National University

      In reply to Michael Shand

      Thanks Michael. As in the case of Climate change denial, the ‘self-sufficiency’ or ‘energy independence’ myth deserves analysis (inter alia) at the psychological, even anthropological level. No doubt this is an important task for another time and other forums.

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  4. Zvyozdochka

    logged in via Twitter

    The USofA will ultimately need an energy 'Manhatten Project' as they are the most energy wasteful people on the planet.

    When I worked there a few years ago, I thought they could do it if they wanted to, but I don't believe it anymore. They take pride in their ignorance of the concept of sustainability. They're in terminal decline because they can't think past next week.

    In the work we did we actually found interest in energy efficiency was declining, as the average US business leader thinks cheap energy will be heading their way forever. Fracking (they said) showed how easy it was to 'solve' energy problems, cheap.

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  5. Charlie W

    citizen

    Hi Barry,

    Interesting article. Where do you see domestic shale gas / oil fitting into this picture? What's your take on big claims being made in relation this technology, such as the following:

    "Shale has made the US self-sufficient in gas almost overnight. The new twist of course is shale oil. It has jumped to 2m b/d from almost nothing eight years ago. America produced 81 per cent of its total energy needs in the first six months of this year, the highest since 1991.", Shale Gas transforming US economy,
    Ambrose Evans-Pritchard, The Age, October 29 2012

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    1. Barry Naughten

      Energy political economist and international relations specialist at Australian National University

      In reply to Charlie W

      Charlie
      Thanks for noting Evans-Prichard’s article.
      The raw facts, by and large, about the non-conventional oil and gas supply ‘revolution’ going on in the U.S. -- and to a less extent elsewhere, including Australia -- are not in dispute.
      In terms of political rhetoric, it is smart for Romney to associate himself with a bonanza that is happening anyway, including the bogus ‘holy grail’ (Evans-Prichard’s term) of ‘energy independence’. Enormous profits are on offer both for shale gas producers…

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    2. Charlie W

      citizen

      In reply to Barry Naughten

      Thanks Barry.

      Agreed that when taking emissions and water issues into account, shale isn't the panacea some believe it is. But purely on a supply point of view, isn't the evidence suggesting that domestic shale oil offers the US a genuine opportunity to profoundly reduce its dependance on oil imports, whilst maintaining reliability and stability of supply?

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